Barclays deducts £1.5m from cycle hire sponsorship

Poor performance has led barclays to reduce the sum it will pay TfL Photo: MayorWatchBarclays has deducted more than £1.5m from its sponsorship of the capital’s cycle hire scheme, a new Freedom of Information request has revealed.

The bank had promised up to £50m towards the loss-making £225m scheme, however poor performance has seen that sum reduced by £1.57m as of 31st January 2013.

The FOI response is the first time Transport for London has admitted to Barclays reducing the value of its sponsorship agreement.

Under its contract with the bank, TfL is committed to meet specified performance criteria and every six months invoices Barclays for the latest sponsorship instalment, less any specified reductions applicable “in the event of performance targets not being met.”

According to TfL’s response, “the assessment period for the deductions differs depending on the criteria. For instance, the service levels are assessed monthly whereas a milestone, such as the scheme launch date, would be assessed when due.”

Where the two sides are unable to agree on the size of application of a deduction they can refer the matter to independent mediation.

In its FOI response, TfL says: “The financial deductions made up to 31 January 2013 under the terms of the Barclays sponsorship agreement are £1.57m. This consists of £0.57m of Scheme Service Levels (KPIs) and launch targets and £1.0m Scheme Usage (Trip Total Target).”

According to TfL, since April 2012 all performance indicators have been met, implying that the penalties imposed relate to performance in the scheme’s first phase.

As of January 31st TfL had deducted £2.6m from scheme contractor Serco for failing to meet its obligations.

TfL told MayorWatch that “Performance Indicators (PIs) [are] set slightly higher for Serco than those agreed with Barclays” resulting in the company being penalised on 42 instances where TfL was not itself in breach of its obligations to the bank.

Performance measurements supplied by TfL reveal that Serco failed to meet targets for Terminal Availability each month between April and DEcember 2012. It also failed to meet daily minimum bike availability targets between May and November.

Last week we reported how internal TfL polling had found rising dissatisfaction with the hire scheme, with users complaining of poor bike and docking station availability.

In February Leon Daniels, Managing Director for Surface Transport at TfL, threatened Servo with “significant financial penalties” unless it reduce the number of empty docking stations.

Commenting on the FOI response, London Assembly Member Darren Johnson said: “Londoners have been taken for a ride with Barclays sponsorship of cycle hire and superhighways. Rather than getting an upfront £50m Barclays cheque towards cycling, Londoners are getting less than the Mayor repeatedly claimed and we are getting it on a drip feed.

“Barclays have got their name splashed all over town. Yet the Mayor has ensured that the local authorities who have also put public money into the scheme get none of the recognition.”